Equipment finance market on course to break $1trillion barrier

The equipment finance market is projected to reach $903 billion in 2014, as corporate investment levels start to rise, according to figures released by the ELFA at its annual convention last week.

The 2104 State of the Equipment Finance Industry Report published by the Equipment Leasing & Finance Foundation (ELFF), and authored by Keybridge Research, shows the industry performed well in 2013, despite the impact of slow macroeconomic growth and a waning replacement cycle.

Total public and private sector equipment and software investment grew by only 3.2% over the year, but the equipment finance industry increased more than 8% due to a rising propensity to finance as interest rates stayed low. However, growth in leasing and financing slowed, with total new business volume growing 9.3% in 2013, compared to 16.4% in 2012.

Most investment activity was the result of an ongoing replacement cycle across many sectors, and the research suggests that a solidifying economic recovery will see faster equipment and software investment growth in 2014.

“This year’s milestone 25th anniversary of the Foundation also signals an equipment finance industry milestone with the approach of $1 trillion in market size,” said Richard Gumbrecht, ELFF chairman and chief growth officer, EverBank Commercial Finance.

The ELFF’s report says slower growth and unprecedented levels of liquidity created an intensely competitive environment in equipment finance last year. While profitability dipped slightly, portfolio performance surpassed the previous year’s all-time best, while delinquency and charge-off rates were at a record low.